Question
Bernice's preferences can be represented by the utility function, U ( x , y )=min{ x , y }. She faces prices ($4, $1), and
Bernice's preferences can be represented by the utility function,U(x,y)=min{x,y}. She faces prices ($4, $1), and her income is $40. If prices change to ($5, $3),
1) What is the compensating variation in income for this price change?
2) What is the equivalent variation in income for this price change?
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Managerial Economics and Organizational Architecture
Authors: James Brickley, Jerold Zimmerman, Clifford W. Smith Jr
5th edition
73375829, 978-0073375823
